Should your company still do an annual review?
Annual reviews, also called employee performance reviews, have been a staple of office culture for decades. However, post-pandemic, the face of the modern workplace is changing. Shifts in the economy and a move toward remote work are shaking up the way we view productivity and challenging us to assess performance with greater nuance.
Are annual reviews still an effective management tool in 2023? They can be, provided the below criteria are met:
Prioritize goal setting
Goals and their achievement can be an extremely effective way to measure employee performance, but only when strong foundations have been laid. Entrepreneur contributor Kris Duggan explains that modern goal-setting processes should be dynamic and agile. This means working with your employee to create SMART (specific, measurable, achievable, realistic, and timed) goals that can guide them throughout the year.
For example, if your employee struggles to meet deadlines, it’s wildly ineffective to merely assign the goal ‘improve time-management skills.’ This goal lacks a time frame and specificity, making it impossible to measure or achieve. A more effective goal would be “deliver all January deliverables on assigned due dates.” Goals need to be reassessed frequently to determine their efficacy.
Focus on qualitative feedback
A downfall of the traditional annual review is that employees are typically presented with a number or a grade. For employees, this ranking often supersedes any of the qualitative feedback that you have provided. To use annual reviews effectively, you must emphasize the importance of long-form feedback and how it can be used to understand (and improve) the numerical ranking.
Rather than drilling down on KPIs or grades, encourage your employee to sit down with you and go over your feedback in depth. Start a dialogue where the worker feels safe to ask questions they might have about performance. Take the time to ask what support your staff need to excel in their role.
Supplement with quarterly reviews
Annual reviews in isolation are unhelpful to most businesses. Feedback should be continuous to reinforce good behaviors and discourage bad ones. If an employee is falling behind, letting this deficiency go unchecked for a year can have disastrous consequences for your business. It also cheats the employee out of the opportunity to improve.
Resolve this by moving to a quarterly review model. Using this format, your first review of the year can establish goals and set expectations. The next two reviews can assess progress, amend goals where suitable, and address concerns. The last review of the year will then establish which goals have been met and where improvement is needed.
Encourage self-evolution
Annual reviews can be confusing and anxiety provoking to employees. One way to reframe the experience is to take the employee out of a passive role and make them a part of the experience. Remove the feeling of powerlessness by providing employees with a self-evaluation form they can fill out.
By reviewing the employee’s self-evaluation alongside your own, you can determine whether your expectations align. Where an employee has ranked themselves significantly higher or lower than you have, ask the worker to explain why they believe they have achieved this score and, if appropriate, amend your scores accordingly.
Turn the tables
Employee performance reviews can feel very one-sided. This may lead to lower employee motivation and engagement. Address this by soliciting feedback during the annual review about your management style and the company culture. Not only will this help to identify pain points among your staff, but this will also create a “buy in,” ensuring staff are aligned with the business values and appreciative of opportunities to grow in their roles. Note that some businesses choose to collect this information anonymously, as fear of reprisal may discourage transparent feedback from dissatisfied staff.
Dry, one-sided and KPI-driven annual reviews are a product of a different time. To use annual performance reviews effectively, you must adopt an open and goal-driven approach that champions employer/employee collaboration.
